KANSAS CITY, Mo. -- Some are criticizing millions of dollars in state and local tax breaks being offered to the U.S. Department of Agriculture, an agency taxpayers already support.
The city council this week is expected to consider redirecting $6 million in earnings taxes to the federal agency.
The USDA plans to move two research agencies with more than 500 good-paying jobs into a downtown office building at 9th Street and Pennsylvania Avenue.
"Over recent years we’ve heard people say, 'Hey, do we need another luxury hotel? Do we need a Walmart shopping center somewhere?'" Mayor Quinton Lucas said. "Maybe we shouldn’t have incentives in connection with that. But for good, game-changing, transformative projects, we all believe there continues to be a place for incentives. And that’s the sort of thing we want to make sure we are balancing. I think council will do that."
The deal calls for Missouri to rebate nearly $20 million in payroll taxes paid by the federal workforce to the office building owner during the next 15 years.
Kansas City's port authority also would get to keep $6 million in state subsidies as part of a so-called administrative fee.
On top of that, another $6 million in earnings taxes paid by USDA workers would go back to the agency to cover relocation costs, instead of paying for important city services like public safety, street repair, and trash collection.
"The USDA is already receiving about $26 million from the state to help prepare the site, to help make it attractive to them," said Patrick Tuohey of the Show Me Institute, a free market think tank. "What Kansas City may do this week or next is offer an additional $6 million in local taxes. It seems to me the state deal is so big and compensates Port KC so richly, that Port KC would be fine if they simply said, 'We are not going to collect a fee and we’re going to protect city tax money.'"
Lucas agrees that the port authority should not reap a huge windfall while earnings taxes are being diverted from vital city services.
He expects the council will change the deal so that Port KC's administrative fee gets back into the general fund to make up for any loss in earnings tax revenue.
The full city council is expected to debate the tax breaks for the federal agency Thursday.